Field of the Invention
The present invention relates in general to systems and methods for collecting debt and/or managing information relating to debt, and more specifically to systems and methods for processing and setting future payment transactions using a computer network.
Description of the Related Art
Financial transactions can entail establishing a series of payments over time to either purchase an item or settle or resolve a debt. One example of a debt resolution system is described in co-pending U.S. patent application Ser. No. 11/256,405, where a transaction resolution system is used to resolve debts between a creditor or debt buyer and a debtor/user. Such a system can facilitate debt resolution and can establish a payment schedule, such as payment of 36 payments of $500.00 per month.
Financial transactions such as a credit or loan contract or agreement, or a debt resolution, may provide for future payments to be made and applied against the outstanding debt or outstanding principal. The concept of “future pay” or “future payment” relates to an acceptable modification of debt terms within an existing contract for an additional payment or additional funds received.
A common example of future payment may be found in today's home mortgage lender contracts where the creditor may allow the debtor to include additional funds designated for application against their outstanding balance. Although common, current methods of collecting future payment are fairly limited and inflexible. Present future payment collection methods are limited to written solicitations and are typically communicated via monthly account statements delivered either by postal mail or as an electronic form via the Internet. Current methods are further limited because the debtor has only a few proactive options for providing future payment outside of the normal billing cycle. These proactive options typically include calling the creditor on the phone and requesting to make an additional payment, or by mailing a payment to the creditor with a letter of explanation. In short, the option must be presented and expected by the payee or creditor.
Current future payment collection methods may only provide the debtor the ability to make an additional principal payment to be applied to the principal amount remaining at the end of the loan. This becomes problematic when a debtor, who is current up to a point in their loan payment schedule, encounters unusual circumstances such as a receiving a windfall, encountering a natural disaster or illness or loss of employment, either affecting the debtor's ability to continue to satisfy the terms of their loan agreement or providing an ability to pay additional funds. When such a circumstance befalls the debtor, the situation can also affect the creditor's ability to collect funds.
In the situation where the user cannot meet the monthly payment, for example, the credit agency may wish to accommodate selected debtors, in this case those affected by a natural disaster, i.e. hurricane, during periods of time they may be unable to meet their obligations. The natural disaster or other circumstance may provide an incentive to the loan originator or holder to provide relief to debtors in a particular geographic area. In order to provide this relief, the debt terms generally will require modification or renegotiation. Modificaiton or renegotiation can be problematic since the payment process is generally managed and realized via a programmed or paper-based process that requires effort and time on the parts of the creditor and debtor to create and execute new loan documents. In addition, multiple loan document copies may be required, signatures may need to be captured, and various instruments may require distribution and recordation to effectuate and implement the new changed circumstances. In addition, a manual paper-based modification process requires significant effort.
In a windfall scenario, the debtor may be unable modify debt terms in order to submit additional payments. For example, the debtor receiving a windfall may desire to pay a greater monthly installment or make additional principal payments by scheduling aperiodic installments during the life of the loan and may desire to pay different amounts in each aperiodic installment. Current payment schemes do not allow for the user to make additional payments on the outstanding debt. For example, if $5000 remains owed, with a $500 monthly installment due, a debtor paying $2000 has $500 applied against the outstanding payment and $1500 applied typically to the end of the loan. The following month requires an additional $500 payment. A debtor may wish to apply, in this example, the $1500 against the next three payments, or may wish to apply them to the next three December payments so she will not have to make payments around holiday time.
In current practice, for a debtor to engage in any of the above activities, debt terms will require complete renegotiation, and aperiodic payments are virtually unheard of. The renegotiation process is generally managed and realized via a paper-based process that requires effort on the parts of the creditor and debtor to create and execute new loan documents. Renegotiation of debt terms, whether desired on behalf of the creditor or debtor can be inefficient, cumbersome, and in certain circumstances difficult or unachievable.
Additional complexities arise when a party outside of the creditor and debtors mortgage loan contract, for example a relative or business partner, desires to provide an additional principal payment on behalf of the debtor. In this instance, the third party is typically unaware of the pertinent information and generally unable to make the payment without providing the funds directly to the debtor. This can be disadvantageous when the third party is a spendthrift, i.e. spends significant funds on matters other than the outstanding debt.
In light of the above, it would be desirable to have a system and method that improves collection of debtor initiated future pay, or future payment attributed to the debtor, and enables creditors to modify contracted debt terms “on-the-fly” in a manner readily accessible to users/debtors.